Question 1

Paradise Publishing Inc entered into a contract with Carol Chambers,a successful author,for the writing of two novels.Under the terms of that agreement,Carol was entitled to payment of $50 000 six months after the submission of each novel.Carol submitted the first novel on the first day of January.As she found the first phase of the contract to be exhausting,she wanted to immediately take a vacation.She asked Paradise for payment of $50 000,but it pointed to the terms of their contract and denied her request.Carol purported to sell her contractual rights regarding the first novel to Nigel.Under that arrangement,Nigel immediately paid $35 000 to Carol in exchange for her right to receive $50 000 from Paradise on the first day of July.With the money that she received from Nigel,Carol took an extended vacation to Costa Rica.While relaxing on the beach,she met Jose,an aspiring author who explained that he was finding it difficult to break into the publishing world.Carol then proposed an arrangement under which he would pay $10 000 to her in exchange for the right to write her second contract for Paradise.Jose agreed.In the middle of May,Paradise learned about Carol's agreements with Nigel and Jose.It insists that both of those arrangements are invalid.Is it correct? Explain your answer.

Accepted Answer

Paradise is half right and half wrong.Unless its contract with Carol prohibited such an arrangement,she was entitled to assign her rights under that agreement.She therefore was entitled to immediately sell her right to receive $50 000 on July 1 to Nigel.The law generally allows an assignment of contractual rights because it should not matter to the debtor (Paradise)to whom it is obliged to pay.In contrast,as a general rule,contractual obligations cannot be assigned.An exception exists that allows for vicarious performance if an obligation is non-personal-ie if it does not matter who exactly performs it.That is usually True,for instance,when a contractor arranges for a sub-contractor to install plumbing in a new house.The homeowner does not care precisely who undertakes the various tasks associated with the project.Vicarious performance is not allowed,however,if the identity of the performing party is significant.That would be True in the present case.Paradise can legitimately object to receiving a novel written by Jose,rather than Carol.The publisher presumably contracted with Carol because it had a favourable impression of her abilities.Carol therefore cannot assign her obligation to write the second novel to Jose.

Question 2

Because he was in love with her,Noriel promised to sell his car to Marina for $500 and Marina agreed to pay $500 for the car.At the time of that agreement,Marina stressed that the deal was purely commercial and made it clear that she did not share Noriel's hopes for an intimate relationship.Before the sale was performed,Noriel fell in love with another woman,Valerie.He therefore now refuses to transfer the car to Marina.The actual market value of the car is $7500.Which of the following statements is TRUE?

Accepted Answer

A)  Marina cannot enforce Noriel's promise because her promise did not provide adequate consideration.
B)  Marina cannot enforce Noriel's promise to transfer the car because that promise was only supported by past consideration-it was based on the fact that Noriel was previously in love with Marina.
C)  Marina cannot enforce Noriel's promise because love and affection are not good consideration.
D)  Marina can enforce Noriel's promise to transfer the car,but only if she pays the actual market value of the car.
E)  Noriel and Marina exchanged consideration even though he has not transferred the car to her and she has not paid the money to him as they exchanged mutual promises. E

Question 3

Stacy hires Youssef to build her home.Youssef gets five of his friends to build the house,writing an agreement between them and him.He also sends a letter to Stacy informing her of the situation.Which of the following is true?

Accepted Answer

A)  This is a statutory assignment because Youssef wrote out the assignment and gave written notice to Stacy.
B)  This is an equitable assignment because it is conditional.
C)  This is an assignment by law because it is a construction contract.
D)  This is assignment by vicarious performance.
E)  This is not a case of assignment. E

Question 4

Luke threatened to sue Leia for $50 000 unless she immediately paid $30 000 to him.Leia paid $30 000 as requested.Luke is entitled to keep that money even if Leia later proves that he never honestly believed in the validity of the lawsuit that he threatened.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following statements is TRUE?

Accepted Answer

A)  Consideration must be adequate but it does not have to be sufficient.
B)  A person can provide consideration by making a promise that will either create a benefit for itself or impose a detriment upon the other party.
C)  A party seeking to receive the benefit of a promise does not have to provide consideration if it placed its seal upon a document in which the promise is contained.
D)  Love and affection can serve as consideration if a contract is created between family members.
E)  To place a contract under seal,a person may either apply a seal or write the word "seal" on a document.

Question 6

The doctrine of promissory estoppel operates only if the representee relies upon a statement made by the representor.

Accepted Answer

A) True 
 B)False

Question 7

As a result of her participation in a telemarketing scheme,Susan was charged with several counts of fraud.Because she knew that the courts had recently started to take a much harsher approach to such crimes,and because she already had been convicted for similar offences in the past,she was anxious to "beat the rap." She therefore called Anqwaan,her brother-in-law,who was also a lawyer,and begged for his help.Anqwaan initially hesitated.Anqwaan already was very busy with his practice.Furthermore,although they were related,Anqwaan had met Susan only a few times and he did not know her much at all.He did,nevertheless,eventually agree to take on the case.As a result of his excellent service,Susan was acquitted on all charges.A few days after the trial ended,Anqwaan sent Susan a bill for his legal services: $15 000.As a family courtesy,Anqwaan had,in fact,charged Susan only half of his usual hourly rate.Susan nevertheless was very upset.As she correctly notes,she and Anqwaan had never discussed his fee and she had never actually promised to pay him anything.Which of the following statements is TRUE?

Accepted Answer

A)  Because the parties never discussed Anqwaan's fee,they could not have created a contract
B)  Even though the parties never discussed Anqwaan's fee,the court may find that Susan implicitly promised to pay for Anqwaan's services and that,by taking the case,Anqwaan implicitly accepted that offer.
C)  If Susan had promised to pay $15 000 immediately after the trial ended,and before Anqwaan raised the subject of his fee,Susan's promise necessarily would be seen by a judge as past consideration.
D)  There cannot be a contract on these facts because,given his relationship to Susan,Anqwaan already had a moral,family obligation to act on her behalf.
E)  Because Susan had requested Anqwaan's services,she would have to pay his entire bill even if he doubled his hourly rate.

Question 8

"Depending upon the circumstances,a promise to pay a specific sum of money may or may not be enforceable if that promise is given in response to services that have already been received." Explain whether or not that statement is accurate.

Accepted Answer

The answer of "Depending upon the circumstances,a promise to pay...

Question 9

Past consideration does not satisfy the requirement of mutuality of consideration but can satisfy an obligation in certain circumstances.

Accepted Answer

A) True 
 B)False

Question 10

Identify the circumstances in which an employee can take advantage of an exclusion clause that is contained in a contract that was created between an employer and a customer.

Accepted Answer

The answer of Identify the circumstances in which an employee...

Question 11

Alpha Manufacturing enters into a carriage contract with Bravo Shipping.During the carriage,a mistake by a contracted stevedore caused Alpha's goods to be damaged.Alpha had property insurance on the goods.Which of the following describes the situation?

Accepted Answer

A)  Alpha can only recover damages from the insurance company as long as there is a Himalaya clause.
B)  Alpha can recover damages from both the insurance company and Bravo.
C)  Alpha can recover damages from both Bravo and the stevedore.
D)  Alpha can only recover damages from the stevedore because this is a case of negligence.
E)  Alpha can only recover $500 because of the hague rules.

Question 12

The word "estop" means

Accepted Answer

A)  "to prove."
B)  "to deny."
C)  "to prevent."
D)  "to guess."
E)  "to promise."

Question 13

Ash is moving from Canada to the UK,but before he goes he wants to buy his sister,Sasha,a ring.He finds a custom jeweler,but the ring will not be ready until after he leaves and he's worried that something might happen with the jeweler.Ash should

Accepted Answer

A)  assign the collection of the ring to his sister.
B)  have the ring delivered to his sister's address.
C)  buy the ring in trust for his sister.
D)  create a contract with his sister promising the delivery of the ring.
E)  ensure that the sales contract has a Himalaya clause to protect him from liability.

Question 14

Dunlop sold tires to Mew.The parties' contract prohibited Mew from reselling the tires unless its sub-buyer agreed to abide by Dunlop's list price for the tires.Mew resold the tires to Selfridge.Under its contract with Mew,Selfridge agreed to (1)abide by Dunlop's list price,and (2)pay $50 to Dunlop for each tire that it sold in violation of that list price.Selfridge resold 10 of the tires to its own customers for less than Dunlop's list price.Which of the following statements is most likely TRUE?

Accepted Answer

A)  Selfridge is required to pay $500 to Dunlop only if Selfridge's contract with Mew is under seal.
B)  Selfridge is required to pay $500 to Mew.
C)  Selfridge is required to pay $500 to Dunlop.
D)  As a result of the contract between Mew and Selfridge,privity of contract exists between Dunlop and Selfridge.
E)  Even though it promised Mew to pay $50 to Dunlop for each tire sold in violation of the list price,and even though it sold ten tires at less than the list price,Selfridge is not liable to Dunlop as Dunlop is not privy to the contract with Selfridge.

Question 15

Bruce and Rosie entered into an agreement.He promised to transfer a necklace to her mother and she promised to deliver a computer to his father.Which of the following statements is most likely to be TRUE?

Accepted Answer

A)  There is no contract between Rosie and Bruce because neither her mother nor his father is a party to the agreement.
B)  As long as Bruce's father relies upon the terms of the existing contract,and as long as he does not act inequitably,he can compel Rosie to transfer the computer to him on the basis of the doctrine of promissory estoppel.
C)  As long as Bruce transfers the necklace to Rosie's mother,Bruce's father can demand delivery of the computer from Rosie.
D)  There is no contract between Bruce and Rosie because there was no mutuality of consideration.
E)  Even if neither Bruce nor Rosie have yet performed,a valid contract exists on the basis of their mutual exchange of promises to perform.

Question 16

Sarah was an orphan.Her uncle Rocco agreed to act as her guardian until she became an adult.In that role,he borrowed money to pay for her education.She promised to repay him when she became an adult.Sarah later became an adult and married Stepan.Stepan also promised to repay Rocco for the money that he had spent on Sarah's education.Sarah and Stepan,however,now refuse to pay the money.Rocco has sued Stepan on his promise.Which of the following statements is most likely TRUE?

Accepted Answer

A)  Sarah and Stepan and jointly and severally liable to Rocco.
B)  Stepan has privity to the contract that was created between Sarah and Rocco.
C)  Stepan is liable to Rocco.
D)  Sarah became liable to Rocco only after Stepan made his promise to Rocco.
E)  Stepan's promise to Rocco involves the concept of past consideration and is likely enforceable.

Question 17

Sentinel Safety Inc entered into a contract with Glengarry Shopping Mall to provide security.The parties' contract contained a clause that said: "Neither Sentinel nor its employees or agents shall be held liable in an amount that exceeds $10 000 for any loss or damage that may be caused in the performance of this agreement." Glengarry promised that it would not sue the named parties for more than $10 000.Elaine works as a security guard for Sentinel.As part of her job,she regularly patrols the Glengarry Shopping Mall.Which of the following statements is TRUE?

Accepted Answer

A)  Elaine could not be held liable for more than $10 000 if she caused property damage to Glengarry Shopping while shopping there on her day off.
B)  Because she was not a party to the contract between Sentinel and Glengarry,Elaine would not be entitled to limited liability if she carelessly damaged part of the mall's property while on a regular patrol
C)  If Elaine carelessly damaged part of the mall's property while on patrol,she would be protected by a statutory exception to the privity of contract doctrine.
D)  The facts involve the contractual concepts of an employee who is not privy to a contract being able to obtain the benefits of an exclusion clause in that contract because of the manner in which the contract was drafted,and in accordance with the reasonable expectations of the parties to the contract.
E)  The facts involve the contractual concepts of privity of contract and promissory estoppel and mutuality of consideration.

Question 18

Epsilon Inc and Delta Ltd entered into an agreement.Epsilon promised to pay $10 000 to Delta in March.Delta promised to deliver a piece of machinery to Epsilon in June.Epsilon paid the money in March.It is now April.The parties do not yet have a contract because while Delta has given a promise,it has not yet performed that promise.

Accepted Answer

A) True 
 B)False

Question 19

The traditional doctrine of estoppel,rather than promissory estoppel,requires proof

Accepted Answer

A)  of either consideration or seals from both parties.
B)  of a statement regarding a past or present fact.
C)  of detrimental reliance by the representor.
D)  that one of the parties acted inequitably.
E)  of an intention to create a new contract.

Question 20

JB Inc sold a piece of equipment to SubSurf Ltd for a total price of $240 000.Under the terms of their contract,SubSurf was required to pay $10 000 on the first day of each month for 24 months.The contract also stated that if SubSurf was late on any single payment,JB was entitled to demand immediate payment of the entire outstanding amount.SubSurf made the first four payments on time.For the next six months,however,it was habitually late by at least one week.JB did not object to receiving those late payments.However,when SubSurf did not pay the eighth instalment on the first day of the next month,JB demanded immediate payment of the entire outstanding amount.Which of the following statements is TRUE?

Accepted Answer

A)  SubSurf must immediately make a lump sum payment of $240 000 to JB.
B)  The parties' contract is invalid because SubSurf's promise to immediately pay the entire outstanding amount if it failed to perfectly comply with the repayment schedule was a gratuitous promise.
C)  The doctrine of promissory estoppel is inapplicable because JB did not make an effective representation or statement.
D)  The doctrine of promissory estoppel is inapplicable because it can only be used as a sword.
E)  JB is estopped from complaining about the late payments as long as SubSurf can prove that it relied upon the fact that the first 10 payments were accepted without objection.

Exam 8: Consideration and Privity

Stacy hires Youssef to build her home.Youssef gets five of his friends to build the house,writing an agreement between them and him.He also sends a letter to Stacy informing her of the situation.Which of the following is true?

Luke threatened to sue Leia for $50 000 unless she immediately paid $30 000 to him.Leia paid $30 000 as requested.Luke is entitled to keep that money even if Leia later proves that he never honestly believed in the validity of the lawsuit that he threatened.

Which of the following statements is TRUE?

The doctrine of promissory estoppel operates only if the representee relies upon a statement made by the representor.

"Depending upon the circumstances,a promise to pay a specific sum of money may or may not be enforceable if that promise is given in response to services that have already been received." Explain whether or not that statement is accurate.

Past consideration does not satisfy the requirement of mutuality of consideration but can satisfy an obligation in certain circumstances.

Identify the circumstances in which an employee can take advantage of an exclusion clause that is contained in a contract that was created between an employer and a customer.

Alpha Manufacturing enters into a carriage contract with Bravo Shipping.During the carriage,a mistake by a contracted stevedore caused Alpha's goods to be damaged.Alpha had property insurance on the goods.Which of the following describes the situation?

The word "estop" means

Ash is moving from Canada to the UK,but before he goes he wants to buy his sister,Sasha,a ring.He finds a custom jeweler,but the ring will not be ready until after he leaves and he's worried that something might happen with the jeweler.Ash should

Bruce and Rosie entered into an agreement.He promised to transfer a necklace to her mother and she promised to deliver a computer to his father.Which of the following statements is most likely to be TRUE?

The traditional doctrine of estoppel,rather than promissory estoppel,requires proof